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Rolling in Dough Cookie Corporation is trying to determine its certainty equivalent NPV and its NPV for the project.

. Rolling in Dough Cookie Corporation is trying to determine its certainty equivalent NPV and its NPV for the project. What is the CNPV if the risk free rate is 2% and the initial investment is \$19,000 (rounded)? What is the NPV with a cost of capital of 15%?
Year Cash Flows Certainty Equivalents
1 \$15 000 90%
2 \$15 000 60%
3 \$ 8 000 50%

SOLUTION:
Net Present Value:
Year
0
1
2
3 Cash Flows
\$(19,000.00)
\$15,000.00
\$15,000.00
\$8,000.00 PVF @ 15% Present Value 1.000
0.870
0.756
0.658 \$(19,000.00)
\$13,043.48
\$11,342.16
\$5,260.13 Net...

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